TA Tuesday: BTC, Inflation, and Election Catalysts Shaping Market Movements


Week-over-week performance:

  • BTCUSD: 67,537 / +3.43%
  • ETHUSD: 2,643 / +1.93%
  • US10Y: 4.22% / +13 bps
  • DXY: 103.92 / +0.59%
  • GOLD (USD/OZ): 2,733 / +3.48%
  • SPX: 5,853 / -0.10%
  • NDX: 20,361 / -0.38%
  • DVOL: 55.38 / -2.77%
  • VIX: 18.38 / -6.65%

 Looking ahead – Economic calendar:

  • Wednesday, 22 October: BoC Interest Rate Decision, $TSLA & $CME Earnings, Cardano Summit starts
  • Thursday, 23 October: US Jobless claims, US New Home Sales
  • Friday, 24 October: Binance Nigeria Exec Trial

On the macro side:

With a week lacking significant macro news, the key drivers have been rising Treasury yields, pushing equities lower and gold reaching a new all-time high (+34.88% YTD!).

This appears to reflect a repricing of structural inflationary pressures and expectations for a slower pace of rate cuts than projected in the Fed’s dot plot.

Despite the VIX having dropped below 20, the overall market remains in low-volatility, with the 30-day realised volatility for the SPX being at 11.94%. In addition to Polymarket, which tends to be rather crypto-biased, The Economist released a model yesterday showing a 54% probability of a Trump win, which is a six-point increase from last week.

Regardless of whether I think, a Trump victory would act as a catalyst for stronger US equities and markets, both candidates are proposing inflationary spending. With realised volatility this low, it currently feels like a “sell the news” moment.

On the FX side:

As per rising yield, DXY is up another week and shy of 104, short-term, a mean-reversion is likely.

 

Chart 1: DXY 1d 

On the crypto side:

BTCUSD has mirrored gold’s performance, driven by rising inflationary pressures and the repricing of Trump’s chances of winning. Once again, it has outperformed ETHUSD.

I maintain my view that in the event of a Trump victory non-BTC tokens are likely to outperform, with Solana and Ripple at the top of my list. I strongly favour Solana, especially considering its current market cap is only 24% of Ethereum’s, leaving significant upside potential.

As we approach the November elections, I expect a choppy market, with both upside and downside capped in BTCUSD (USD 65,000/USD70,000) and ETHUSD (2,8000/USD2,550). However, downside risk remains if there is a shift in the odds of Trump winning. Despite this, I continue to favour trades with positive convexity.

 

Chart 2: BTCUSD 1d 

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